April 3, 2000
CROP MARKETS CONTINUE TO FOCUS
The USDA reports released on March
31 contained a few surprises. March 1 stocks of soybeans were
smaller than expected; planting intentions exceeded expectations
for corn; and spring wheat seeding intentions were smaller than
anticipated. For the most part, however, the reports did not contain
large enough surprises to divert the market's focus from weather
and crop prospects.
Stocks of soybeans on March 1, 2000
totaled 1.397 billion bushels, 60 million less than stocks of
a year ago and about 20 million bushels less than expected. The
stocks figure implies a large "residual" use of soybeans
during the first half of the marketing year. This large residual
may imply that the 1999 crop is still overestimated, or some of
the missing inventory may be found in later reports. For now,
however, the market is expecting that the USDA will use the smaller
than expected inventory estimate to reduce the projection of year
ending stocks, perhaps below 300 million bushels.
March 1 stocks of corn totaled 5.606
billion bushels, 92 million less than stocks of a year ago and
about 25 million more than expected. The stocks figure implies
some slow down of feed and residual use during the second quarter
of the year. Use during the quarter, however, was 2.5 percent
larger than use during the same quarter last year and implies
that use is on target to reach the USDA projection for the year
at 5.65 billion bushels.
Producers reported intentions to
plant a record 74.871 million acres of soybeans in 2000, 1.090
million more than planted last year and close to the average pre-report
guess. The increase in acreage is coming in the western corn belt.
Acreage in those 7 western states is estimated at 37.25 million,
compared to 35.8 million last year. The largest increase, 500,000
acres, is planned in South Dakota. The western corn belt accounts
for 49.8 percent of the acreage intended for soybeans, up from
45.1 percent in 1995 and 41.1 percent in 1990. Acreage in the
eastern corn belt is expected to reach 24.17 million acres, only
70,000 more than planted last year. Intentions in Illinois are
down 100,000 acres from last year's plantings.
The market generally expects actual
soybean acreage to exceed March intentions, since that has been
the tendency since 1987. In the past 13 years, actual soybean
acreage has exceeded March intentions 11 times. Acreage fell below
intentions only in 1989 and 1990. The margin of increase has ranged
from 25,000 acres (1998) to 2.16 million acres (1991). The increase
since 1996 (when farm policy changed) has ranged from 25,000 to
1.2 million acres, and averaged 905,000 acres.
Producers reported intentions to
plant 77.881 million acres of corn in 2000. That exceeds last
year's plantings by 450,000 acres, but is 2.284 million less than
acreage planted in 1998. Intentions are close to last year's acreage
in most states. The largest changes reported are for a 300,000
acreage increase in Illinois and South Dakota, and a 300,000 acre
reduction in Nebraska.
The March 1 estimate of winter wheat seedings came in at 43.245
million, 329,000 above the acreage reported in January, but 3.533
million less than seeded for harvest in 1998. Seedings of durum
wheat are expected to total 3.61 million acres, 425,000 fewer
acres than seeded last year. Intentions for other spring wheat
were estimated at 14.809 million acres, 539,000 below last year's
seedings. Intentions for all classes of wheat are estimated at
61.664 million acres, 1.15 million less than seeded last year.
Intentions for other major crops
include at 1.7 million acre increase in cotton, a 440,000 acre
increase in canola, a 506,000 acre decline in sunflowers, and
an 815,000 acre reduction in sorghum. Intentions for feed grains
(corn, sorghum, barley, and oats) total 96.944 million acres,
332,000 above last year's acreage. Intentions for reported oilseeds
(excluding cotton) total 80.908 million acres, 966,000 more than
planted last year.
With harvested acreage near the
average percent of planted acreage and yields near the level of
the past four years, corn and soybean planting intentions project
to production of 9.25 billion bushels and 2.8 billion bushels,
respectively. With corn consumption running at an annual rate
of about 9.5 billion bushels, stocks could be reduced another
250 million bushels during the year ahead, supporting prices in
the $2.30 to $2.40 range. With soybean consumption of 2.7 billion
bushels, average yields would keep supplies abundant and prices
below the loan level.
Currently, the market is concerned
about persistent dry weather in the midwest and prospects that
yields will fall below the level of the past four years. This
concern is likely to keep prices moving higher, with an initial
target of $2.80 for December 2000 corn futures and $6.00 for November
2000 soybean futures.
Issued by Darrel
University of Illinois